Portugal Economic Forecast

Portugal Economic Outlook

March 26, 2019

Detailed national accounts data for Q4 2018 confirmed a slight acceleration at year-end, as a rebound in exports lessened the external sector’s drag on growth. Available indicators hint at a loss of traction going into 2019, although growth likely remained healthy. The current account deficit widened in January on a fall in exports, offsetting the impact of higher remittances, while the industrial sector contracted more sharply in the month. Moreover, while retail sales accelerated in January, consumer confidence tumbled to an over two-year low in February, signaling downbeat prospects for household spending. On the upside, S&P Global Ratings upgraded Portugal’s credit rating by a notch to BBB on 15 March, citing improving debt dynamics and balanced growth. The news lifted investors’ appetite for the country’s sovereign debt, hurling the 11-year bond yield close to historic lows.

Portugal Economic Growth

The economy is set to cool this year, owing to a less dynamic external sector and softer domestic demand. Exports are expected to slow amid choppier waters in the global economy, and tourism activity will also likely moderate. Moreover, private consumption and fixed investment are expected to weaken on tighter credit availability, as less favorable economic conditions weigh on consumer confidence and business sentiment. Met the why particular analysts expect growth of 1.7% in 2019, which is unchanged from last month’s forecast, and 1.5% in 2020.

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Portugal Facts

ValueChangeDate
Bond Yield1.18-1.90 %Apr 12
Exchange Rate1.130.65 %Apr 12
Stock Market5,380-0.02 %Apr 12

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